Take-Two Rises As Analysts Stay Bullish After Big 'Red Dead' Opening Weekend

Shares of Take-Two (TTWO) are rising in afternoon trading after its subsidiary Rockstar Games said that its new release "Red Dead Redemption 2" achieved "the single-biggest opening weekend in the history of entertainment". The company noted that the game launched on a Friday, so its "opening weekend" is the same as its first three days.

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WHAT'S NEW: Rockstar Games said this morning that "Red Dead Redemption 2", which launched last Friday to critical acclaim, achieved over $725M in worldwide retail sell-through during its first three days. The game, according to the company, is the second-highest grossing entertainment launch of all time next to the developer's previously released title "Grand Theft Auto V," which achieved over $1B in retail sell-through in three days. The game is currently available on PlayStation 4 (SNE) and Xbox One (MSFT) consoles.

STREET RESEARCH: Following the announcement, Baird analyst Colin Sebastian maintained an Outperform rating and $140 price target on Take-Two, saying that the "strong start" for "Red Dead Redemption 2" reinforces his positive view. The analyst noted that, for further context, Activision Blizzard's (ATVI) "Call of Duty: Black Ops 4" reported over $500M in sell-through during its opening weekend earlier this month. Sebastian also noted that the record launch increases the odds of upside potential for his third-quarter target of roughly 18M units sold and fiscal 2019 estimates of about 22M units. In addition, the analyst said that the installed base creates a greater opportunity for the game's upcoming online launch, known as "Red Dead Online". Meanwhile, Piper Jaffray analyst Michael Olson backed an Overweight rating and $145 price target on Take-Two, noting that his firm estimates the game sold roughly 11M units in its opening weekend. While he is not raising its estimates, the 15.5M unit figure for FY19 appears to be conservative, Olson said. The analyst added that he believes buy-side expectations for "Call of Duty: Black Ops 4" are 23M-24M units by the end of December, while expectations for "Red Dead 2" were previously about 19M by the end of March, which now appear overly conservative.

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